A different Budget without plan, non-plan segments

Early presentation seeks to give better control of resources

Besides early presentation, the Union Budget for 2017-18 will also have a new structure with the government scrapping the distinction between plan and non-plan expenditure.

The Centre contended that the distinction led to inefficient use of available resources.
The government now plans to have two categories – capital and revenue expenditure. This would also require changes in the format in which the Budget documents are prepared.

Plan expenditure was in the nature of creation of assets while the non-plan component referred to spending on the routine functioning of the government such as payment of salaries, subsidies and interest.

The changes will enable the finance ministry officials to make a better assessment of the operating costs of the government and the investments made by it in addition to measuring the efficiency of the activities, officials said.

The Union Budget is scheduled to be presented in Parliament on February 1 as per the new Parliamentary calendar drawn by the NDA government.

An early presentation of the Budget and its passage before the start of the new financial year is expected to give various ministries better control over the available funds for implementation of projects. The idea of doing away with the plan and non-plan expenditure was suggested by the Administrative Reforms Commission chaired by M Veerappa Moily in its 14th report titled ‘Strengthening Financial Management Systems’  presented to the government in 2009.

With the Planning Commission getting replaced by NITI Aayog, the responsibility of the budgetary allocation now rests entirely with the finance ministry. In the earlier approach, the ministry would finalise the non-plan allocation and then ask the Planning Commission to allocate the plan resources.

The advantages of merging the plan and non-plan classification are single source of resource allocation, expeditious project appraisal, liberalised delegation of financial powers to ministries and focus on outcomes, officials said.